The Financial Select Sector SPDR (NYSE: XLF), the largest financial services exchange traded fund by assets, is up just 2.2 percent year-to-date, well below the 5.7 percent returned by the S&P 500. Financials' laggard status is encouraging some traders to make bearish bets against the S&P 500's second-largest sector weight.

When it comes to sector-level bets on rising interest rates, many investors believe the best place to go is to financial services. However, when the Federal Reserve raised interest rates last month, it sounded a surprisingly dovish tone, stoking concern about bank stocks and ETFs like XLF.

“Thanks to a stumble throughout the month of March, XLF has fallen back to earth a bit and is actually underperforming the S&P 500 by more than 300 basis points. What has changed here since XLF traded higher than $25 briefly at the end of February?,” said Street One Financial Vice President Paul Weisbruch in a note out Tuesday. “Today, interest rates are roughly where they were at the end of February, so we do not believe that this is a factor, but there could be some concern looming that the sector perhaps ran too far, too fast, and we are expecting quarterly earnings reports from the top holdings in the sector in the near term.”

Data suggest some traders have eyeing June options in XLF.

“This brings us to our next point, which is a mention of what we have been seeing in options markets, including some June 22 put buying in XLF,” said Weisbruch. “Given XLF is trading at around $23.60 currently, these options are clearly out-of-the-money, but there are more than two months left until expiration, and one would capture access to significant events in the next several months — including the bevy of corporate earnings that we mentioned previously.”

Leveraged financial services ETFs are painting a different picture. For example, traders have added an average of more than $793,000 per day to the Direxion Daily Financial Bull 3X Shares (NYSE: FAS) over the past 30 days, according to Direxion data.

Over the same period, the Direxion Daily Financial Bear 3X Shares (NYSE: FAZ) has averaged daily outflows of almost $431,000. FAS attempts to deliver triple the daily returns of the Russell 1000 Financial Services Index while FAZ seeks to deliver triple the daily inverse returns of that index.